Ambrose Evans-Pritchard has covered world politics and economics for 30 years, based in Europe, the US, and Latin America. He joined the Telegraph in 1991, serving as Washington correspondent and later Europe correspondent in Brussels. He is now International Business Editor in London. Subscribe to the City Briefing e-mail.

Rebounding Europe to leave crippled Britain behind? Um

Holger Schmieding at the German bank Berenberg tells us this morning that Britain is next in line for punishment.

The eurozone has gone through the brunt of its fiscal squeeze and will be well on the way to recovery by 2013. The economic/debt crisis will rotate from Continental Europe to the UK, with "peak austerity" hitting the British in 2013/2014 just in time to do maximum damage before the Scottish referendum.

Let us call it the German view. I don’t agree at all, but it is an interesting line and one becoming prevalent in EU circles.

He buys the claim that there has been "very little belt-tightening in the current fiscal year". Du lieber Himmel. Net tightening this year is 1.4pc of GDP. Any more would be idiotic.

But he is right that more pain is yet to come, and for that we can thank the structural deficit of 5.2pc of GDP at the top of the cycle left by Gordon Brown. It was an egregious fiscal bubble, far worse than anything done by Spain.

The cuts will be especially painful in Scotland where dependency on government spending is higher (though that cuts both ways on the Scottish referendum).

"If the euro crisis fades over the course of 2013, as we expect, the contrast between a UK reeling under additional austerity and a eurozone which has already emerged from its own adjustment crisis could strengthen the hand of those in Scotland who want their nation to be an independent part of the European family – rather than a part of the UK".

"The biggest risk could be a market perception that, after a British divorce, a "rump UK" could turn even more anti-EU than the UK is now. Even the slightest perceived threat that a rump UK might eventually leave the European Union or could opt out of some major rules and institutions affecting the common market for services could be a major blow for Greater London, which has successfully turned itself into the services centre for Europe and depends on guaranteed and fully free access to its major market."

"It would be ironic if, after a possible fading to the euro crisis in 2013, markets start to discuss the risks to another union of nations in Europe – the United Kingdom. Fortunately, the risk still looks contained."

I don’t wish to single out Holger Schmieding. He is one of my favourite EMU bankers. He is unabashedly idealistic about the project. And he likes a scrap anyway.

But the claim that Europe is through the worst is surely courting fate. Yet this is now the new orthodoxy. French president Francois Hollande said this morning that the eurozone is "very close" to close to overcoming the EMU crisis.

I suspect that Mr Hollande is going to have a rude awakening in 2013. France is already in or near recession and will tighten by 2pc of GDP next year. It too faces "peak austerity" in the future. This will combine with further deflation of the French property bubble, one of the worst in the world.

As for the Iberians, they face Hell next year. Spain already has 25pc unemployment even before the full fiscal onslaught begins. What happens if the HSBC is right in warning that another 1.5 million people in Spain could lose their job by the end of 2013? if unemployment really goes to 31pc?

This saga is all about politics now, and that test comes next year, and again the year after. None of us known how long can Latin societies endure a contractionary squeeze that cumulatively amounts to a revolution. What we do know is that politics is "non-linear". Protracted slumps lead to sudden lurches, to the Left, to the Right, into Millenarian madness.

Yet somehow a view has taken hold that Europe has finally got its act together: with the Draghi bond plan at the ECB, a banking union, a €500 billion firewall, a German volte-face on Greek ejection from the euro, and with the whole paraphernalia of fiscal discipline – and finally with the decision last night by Moody’s to hold fire on the junking of Spanish debt.

The IMF does not believe a word of it. Europe’s crisis response is "critically incomplete, exposing the euro area to a downward spiral of capital flight, break-up fears and economic decline," it said last week. The IMF’s new findings on the fiscal multiplier have essentially discredited Europe’s austerity strategy.

It is true that short-covering in the face of an ECB intervention threat has led to a sharp fall in Spanish and Italian bond yields, especially two-year debt. But Europe is not facing a bond yield crisis (though that is a symptom). It faces a fundamental currency misalignment between North and South, and to try to solve this solely by competitive devaluations in the South is to drag the whole system into a depression.

I agree that the Draghi bond plan is potentially a game-changer for EMU, but it has not actually happened yet. The exact terms of a Spanish rescue have yet to be established. The Bundestag then has to agree.

Once the ECB intervenes, investors will immediately start to question a) whether the bank will do the job properly this time, or fiddle on the edges like last time, and b) whether it is really willing to give up its preferred creditor status.

Since it has refused to give up this status on Greek debt – saying it would be a treaty violation to do so (deficit financing) – no investor on this planet is going to believe such an empty pledge on Spain and Italy.

Many will fear subordination and greater losses if the crisis spins out of control later. Those loyal pension funds and insurer who held onto their Greek debt have by now lost over 85pc of their money. That is what ECB subordination will do to you.

At the end of the day, Britain still has its own sovereign currency and central bank and can do whatever is needed to prevent a bond crisis.

Greece, Spain, and Portugal, Italy, and France cannot cushion their austerity with monetary stimulus a l’outrance, or by letting the currency adjust to the cycle and find its proper level.

So yes, Britain is certainly in very big trouble, but I am willing to wager a bottle of Rioja that nobody will dare to say this time next year that Club Med is in significantly better shape.